What is the GST/HST new housing rebate?
Homes come with a pretty hefty price tag, especially these days. You might think the only way to get a home is to save up a big down payment and take out a mortgage, buy you actually have some options that will make paying that massive down payment a lot easier.
There are a number of government programs and rebates designed to make homes a lot more affordable for first-time buyers. These programs can sometimes make the difference between you being able to buy a home or not, so it’ll do you some good to learn about one of them right now: the GST/HST new housing rebate.
What is the GST/HST housing rebate?
Simply put, the GST/HST new housing rebate is a federal government program that gives tax rebates for purchasing a newly constructed home. You can also get the tax benefit if you build or significantly renovate a home. If you live in Ontario, Nova Scotia, and British Columbia, there are also provincial new housing rebates to get even more money back.
How much money you can get back from the GST/HST rebate?
The amount of the GST/HST new housing rebate is calculated from your purchase price excluding the GST/HST and any other rebates. MoneySense refers to this as the “consideration” price in their piece explaining how to calculate the amount of your rebate
Everyone receives a different rebate because of different tax rates and the extra boost from the provincial rebates in Ontario, B.C., and Nova Scotia. According to the MoneySense article, Ontario has a max claim of $24,000 while this site claims the maximum federal rebate is $6,000. That means that if all conditions are met perfectly, you could save $30,000 on the price of your home because of the rebates. Not bad.
Who is eligible for the GST/HST new housing rebate?
The new housing rebate has specific rules regarding who can use it. First, it is for individuals only, not for commercial entities. You can apply if you fit under any of the following categories:
- Purchase a newly constructed home: New homes includes detached, semi-detached, condos, mobile homes, and floating homes for under $450,000 before taxes and rebates. The home must be your primary place of residence and you must have made the purchase in the last 12 months.
- Build or contract someone to build a house on land you own or lease: Owner-built homes are eligible for the rebate too as long as the fair market value of the home and land together are less than $450,000.
- Substantially renovate or contract someone to substantially renovate your home: Substantial renovation may sound a little subjective at first, but the government makes it clear that this rebate only applies to people who have basically built an entirely new interior out of their home. Over 90% of the changes to the home must be different to qualify for the rebate. Furthermore, only renovations to livable areas count towards the 90%. When it comes to additions to your house, the work must be significant enough to count as its own home. It should at least double the livable area of your home to be eligible
- Bought shares in a newly constructed or substantially renovated co-operative housing project: Buying a co-op home works a little differently than the regular process, but it doesn’t make a difference to the rebate. As long as its purchase price falls under the maximum ($450,000 plus whatever tax rate the co-op paid on the complex). You also have to be the first person to take possession of the unit you’re paying for.
How to get the GST/HST new housing rebate
If you are eligible for the rebate, all you need to do is find which form matches your situation and follow the instructions on how to fill it out. The rebate takes anywhere from a month or two to six months to process, but most reports say it takes about two months.
The GST/HST new housing rebate is an easy way to save a couple thousand bucks on your new home. If you’re about to buy a house, or you recently completed your purchase, make sure you apply for your rebate or ask to see if your builder has already factored the rebate into the price.